Chinese Skip New-Year Trips to Japan

Chinese demand for tour packages to Japan during the Lunar New Year holiday has fallen by about half compared with last year. The WSJ's Jeffrey Ng explains why Chinese tourists are avoiding what was once the season's most popular international destination.

By

Joanne Chiu

Feb. 8, 2013 12:06 p.m. ET

The number of Chinese tourists traveling to Japan over the Lunar New Year holiday are set to plummet more than 50% from a year earlier amid heightened territorial tension between the two countries.

A tiff over islands both nations claim further escalated this week with the Japanese accusing the Chinese military of twice locking weapons-guiding radar on its naval forces, an assertion that China denied on Friday.

This year, Thailand and South Korea have knocked Japan off the list as China's top international holiday market for the weeklong Lunar New Year break, according to Nasdaq-listed Ctrip.com, one of China's biggest online travel websites.

Tokyo-based Sogo World Travel Ltd., an inbound travel agent for which Chinese visitors account for around a third of business, is feeling the brunt of the travel downturn.

Company President Wang Yatnien said Friday the number of Chinese tourists Sogo World is arranging trips for this Lunar New Year has dropped 50% from a year earlier to around 2,000-3,000.

Mr. Wang said some individual Chinese travelers have returned to Japan as the yen has weakened, but Chinese tour groups remain notably absent, as it appeared travel agencies in China still refrain from arranging Japan trips.

"I wish people would just ignore political issues and visit here," said Mr. Wang, a Singapore citizen.

Meanwhile, Chinese airlines have shifted from the Japanese market as a result of lackluster demand, and that's contributing to a drop in international airfares out of China during the new-year period compared with last year.

The Lunar New Year, which officially starts over the weekend, is the busiest travel season of the year for Chinese and a time to see family or spend time overseas. International travel has seen particularly strong growth in recent years on the back of a stronger Chinese currency.

Despite the plunge in travel to Japan, international travel demand from China remains strong, with the total number of travelers booking international trips at Ctrip.com growing 40% to 50% during the new-year break from a year earlier.

"Instead of paying return visits to some domestic travel spots, more and more travelers are upgrading to short-haul or even long-haul outbound destinations," said Guo Dongjie, a senior vice president at Ctrip.com.

But as China's main airlines have boosted capacity with new aircraft and routes, airfares are under pressure. At the end of December, the nation's three main state airlines, Air China Ltd., China Southern Airlines Co., and China Eastern Airlines Corp. had passenger capacity increases of between 7% and 11% from a year earlier.

Average ticket prices for international travel are down 36% in this peak holiday period compared with a year earlier, according to data from online tourist agency Mangocity.com Ltd., a unit of state-run China Travel International Investment Hong Kong Ltd., dragged by excess capacity and fewer travellers to Japan.

The agency notes that one-way flights from the southwestern city of Kunming to Southeast Asia are going for as low as 99 yuan (about $16), while flights between Shanghai and New York could be as cheap as 2,800 yuan (around $450).

Prices for domestic air travel are also down for the Lunar New Year period, falling 6.1% from a year earlier, as "the launch of several high-speed rail routes in 2012 have diverted some of the domestic traffic from airlines," says Mangocity.com.

The nation's three largest state carriers declined to comment on their forward booking figures.

"We do feel some softening in domestic air travel demand this year. Last year, most of our popular routes were all fully booked during the Spring Festival, but now there are still empty seats on some routes," said Zhu Tao, chairman at West Air Co., a unit of China's aviation conglomerate HNA Group and sister company to Hainan Airlines Co.

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